Simply because two exchange traded funds sound similar in name does not mean the funds are exact replicas of each other and that is especially true when it comes to sector and industry ETFs.
Many of the most popular sector ETFs are cap-weighted funds, but even with those products, there can be significant differences. For example, one issuer’s consumer staples ETF could be mostly allocated to large-cap stocks while a rival issuer, using a different index, could turn out a staples ETF with increased small-cap exposure.
Then there are the equal-weight sector and industry ETFs, many of which have risen to prominence. And that does not include an array of sector and industry ETFs that employ other alternative weighting methodologies, placing those funds firmly in the smart or strategic beta. Alternatively-weighted sector and industry ETFs frequently sport noticeably different returns than their cap-weighted counterparts, though there comparisons where two supposedly different ETFs tracking the same sector move in near lockstep with one another. [Different Health Care ETFs Similar Results]
There are significant differences between two of the marquee insurance industry ETFs.
“Through October 29, 16 S&P 500 insurance companies reported third quarter earnings. Lindsey Bell, Senior Analyst for S&P Capital IQ’s Global Markets Intelligence noted that 88% of these companies beat Capital IQ consensus forecasts. Higher premiums, improvements in investment income and lower catastrophe losses are benefiting the group this quarter,” said S&P Capital IQ in a new research note.
Insurance companies and the corresponding ETFs have been decent though market-lagging performers as the group waits on higher interest rates to drive further share price appreciation. Amid that lethargy, differences between competing ETFs, at least at the performance level have been clear. [Insurance ETFs Wait for Interest Rates to Rise]